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EU ETS Phase 3 benchmarks: Implications and potential flaws

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  • Stephen Lecourt

Abstract

In its third Phase (2013-20), the European Union Emissions Trading Scheme allocation methodology is shifting from grandfathering to a combination of auctioning and benchmarking. Free allocation is now be devoted to non-electricity generators only (save exemption), and is linearly decreasing throughout the Phase with a view of no free allocation in 2027. Benchmark-based free allocation is meant to reward lowest CO2-intensive installations as opposed to grandfathering, which allocated allowances based on historical emissions levels. This policy note describes the concrete implications involved by this shift in allocation methodology, and addresses the potential flaws of benchmarking-based allocation, using data from French nstallations’ Phase 3 provisional free allocation.

Suggested Citation

  • Stephen Lecourt, 2013. "EU ETS Phase 3 benchmarks: Implications and potential flaws," Working Papers 1305, Chaire Economie du climat.
    • Handle: RePEc:cec:wpaper:1305
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    File URL: http://www.chaireeconomieduclimat.org/RePEc/cec/wpaper/13-04-Cahier-R-2013-05-Lecourt-Benchmarking.pdf
    File Function: First version, 2013
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    Cited by:

    1. Wang, M. & Zhou, P., 2022. "A two-step auction-refund allocation rule of CO2 emission permits," Energy Economics, Elsevier, vol. 113(C).
    2. Fontini, Fulvio & Pavan, Giulia, 2014. "The European Union Emission Trading System and technological change: The case of the Italian pulp and paper industry," Energy Policy, Elsevier, vol. 68(C), pages 603-607.
    3. Frédéric Branger & Oskar Lecuyer & Philippe Quirion, 2015. "The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 6(1), pages 9-16, January.

    More about this item

    Keywords

    EU ETS; Benchmarks; Preliminary amounts; Carbon leakage; Historical Activity Level;
    All these keywords.

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